Shinhan Financial Group's net profit tops 5 trillion won in just three quarters, surpassing last year's full-year result

[Financial News] Shinhan Financial Group's cumulative net profit for the first three quarters topped 5 trillion won, surpassing its full-year result for last year. This was driven by balanced growth in interest and fee income. However, looking at the third quarter alone, net profit fell by about 13% from the previous quarter as non-interest income declined, partly due to lower securities trading value.
Shinhan Financial Group said on the 27th that cumulative net profit for the first three quarters of this year was 5.0274 trillion won, up 12.7% from the same period last year. It surpassed last year's full-year net profit of 4.9716 trillion won in just three quarters, already setting a record for annual results.
Third-quarter net profit, however, was 1.5846 trillion won, down 12.9% from the previous quarter. Despite an increase in interest income, lower securities trading value and a contraction in non-interest income due to rising interest rates affected overall results.

Shinhan Financial Group's third-quarter interest income was 3.1908 trillion won, up 1.8% from the previous quarter. Cumulative interest income rose 7.9% year on year to 9.3493 trillion won. This reflected continued growth in loan assets and an improved net interest margin (NIM).
Looking at the third quarter alone, the group's NIM was 1.91%, down 0.02 percentage points from the previous quarter. Shinhan Bank's NIM also fell by 0.03 percentage points, from 1.61% to 1.58%, over the same period. This was due to increased funding-cost pressures in the second half of the year.
Non-interest income fell noticeably. Third-quarter non-interest income was 790.2 billion won, down 45.5% from the previous quarter. The main factors cited were lower securities brokerage commissions resulting from reduced securities trading value and a decline in securities-related gains and losses.
Cumulative non-interest income for the first three quarters was 3.4283 trillion won, up 8.2% year on year. 
By affiliate, Shinhan Bank posted third-quarter net profit of 1.2252 trillion won, down 5.9% from the previous quarter. Its cumulative net profit rose 9.8% year on year to 3.6837 trillion won. As of the end of September, won-denominated loans were up 3.3% from the end of last year. Corporate loans increased 4.7%, while household loans rose 1.5%.
Shinhan Securities' third-quarter net profit plunged 77.4% from the previous quarter to 65.3 billion won. Its cumulative net profit, however, increased 78.9% year on year to 642.9 billion won.
Shinhan Card posted third-quarter net profit of 232.4 billion won, up 68.4% from the previous quarter. Shinhan Life's third-quarter net profit was 128.8 billion won, down 31.3% from the previous quarter. Shinhan Capital and Shinhan Asset Management posted net profits of 23.1 billion won and 13 billion won, respectively, down 29.7% and 63.1% from the previous quarter.

Shinhan Financial Group said it would increase total shareholder returns this year to a record high of about 3 trillion won. That is about 20% more than the 2.5 trillion won returned last year.
Specifically, it plans to provide about 1.4 trillion won in annual cash dividends and buy back and cancel 1.6 trillion won worth of its own shares. At a board meeting today, it approved a third-quarter dividend of 740 won per share and decided to buy back shares worth a total of 450 billion won. Of that amount, 200 billion won is to be used for buybacks in the third quarter of this year, with the remaining 250 billion won scheduled for January next year. The January buyback will be counted separately from this year's total shareholder returns.
The large-scale shareholder returns are being pursued on the strength of stable capital ratios. Shinhan Financial Group's common equity Tier 1 (CET1) ratio stood at 13.62% at the end of September, up 0.12 percentage points from the previous quarter. Its capital adequacy ratio under Bank for International Settlements (BIS) standards was 15.99%.
Profitability indicators also improved. Shinhan Financial Group's annualized return on equity (ROE) stood at 11.9% at the end of September, up about 0.9 percentage points year on year. This makes it more likely that the group will achieve this year, ahead of schedule, its target of an ROE of at least 10%, which it had initially planned to meet by 2027.
Shinhan Financial Group plans to strengthen its nonbanking business base through its recent move to acquire Lotte Insurance. Payment of the 693.3 billion won acquisition price is expected to lower its CET1 ratio by about 0.19 percentage points, but the group says it can maintain ample capital capacity.
Loan-loss provisions in the third quarter totaled 486.3 billion won, up 11.2% from the previous quarter. Cumulative loan-loss provisions, however, fell 4.5% year on year to 1.4361 trillion won. The cumulative credit cost ratio was 0.42%.
Jang Jeong-hun, CFO of Shinhan Financial Group, said, “With progress toward our 10% ROE target becoming visible, we will continue to pursue sustainable growth through profitability-focused portfolio management and efficient capital allocation. We will also strengthen the foundation for improving the group's profitability over the medium to long term through the acquisition of a non-life insurer and the normalization of our insurance business.”
[email protected] Seo Ji-yoon Reporter